As a part of larger financing round Zomato is likely to invest $100 million in Grofers

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Zomato is an Indian multinational restaurant aggregator and food delivery company. Zomato provides information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities. Recently it is in talks for it may invest in e-grocers Grofers.

This comes after discussions between the two companies of a likely merger failed to materialise last year amid the onset of the coronavirus pandemic. Its investment is likely to be a part of larger financing round. Zomato may invest $100 million in Grofers as per the sources. Last year Zomato was planning to acquire in all stock deal. “Zomato has always been interested in grocery segment and was looking to partner with them instead of creating something on its own” as per what the source say. Furthermore, Grofers is expected to scrap the IPO plan and continue to remain private sector. Zomato’s potential investment in Grofers follows the company’s plans to go public this year. Zomato has also released its draft red herring prospectus in preparation for the public listing. The company entered the online grocery space and exited it after a brief experiment last year, Swiggy continues to scale up its online grocery presence with Instamart, its quick delivery service for essentials which is currently available in Gurugram and Bengaluru.

The online grocery space is expected to grow this year as the second wave of the Covid-19 pandemic has again reinforced physical distancing norms and increased reliance on ecommerce platforms for food delivery. It is also rumoured that Grofers was in discussions for a listing on the NASDAQ through a merger with Cantor Fitzgerald’s special purpose acquisition company (SPAC). Zomato has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on April 28. According to the DRHP, the company will offer equity shares aggregating up to Rs 8,250 crore (nearly $1.1 Billion). Of this, Rs 7,500 crore will be fresh issue, while Rs 750 crore will be an offer for sale for its existing investor Info Edge. Moreover, Grofers recently informed that it is currently at run rate of $1 billion in annual gross merchandise value(GMV).

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